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of American Physicians and Surgeons, Inc.
A Voice for Private Physicians Since 1943
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Volume 58, No. 2 February 2002
SENATE ABORTS CHOICE
The first stage of a rocket that might have let American
patients escape the domain of the government/moneyed special
interests ("public-private partnership") was aborted,
singlehandedly, by Senate Majority Leader Tom Daschle just before
Christmas. The first beneficiaries would have been families whose
breadwinner lost employment-and thus medical insurance-after the
September 11 attack on America.
The idea that individual patients/customers should choose
and control their medical insurance and treatment is gaining
strength: enough strength that a proposal to mitigate tax
discrimination against self-owned insurance could have lifted
off. However, this idea is so dangerous to their agenda that
proponents of total government control of medicine forged new
chains to tie it to the launching pad.
The method is basically the Filibuster. But nobody actually
has to hold the floor and talk constantly as portrayed in Mr.
Smith Goes to Washington. Rather, the Senate Majority Leader
simply changed the rules so that any proposal he finds
"controversial" requires a 60-vote majority to pass. That's how a
one-vote lead in the Senate translates into iron control of the
agenda, or effective single-party rule. (For details, see this
month's Legislative Supplement.)
An aggregation of numerous weighty components exerts a
powerful gravitational pull against the take-off of freedom in
medicine, including: cultural Marxism; economic illiteracy; the
politics of dependency; and politically favored interest groups.
Sen. Daschle can abuse power with impunity, states Paul
Craig Roberts, because the media and the intellectual elite are
controlled by cultural Marxists-who would hound from office any
Republican using similar tactics (Wash Times 1/4/02).
Their ideas are pervasive-especially in the younger generation.
The statement that "When an economic function is turned over to
the government, social cooperation invariably replaces self-
interest as the motivation for human action" elicited incoherent
Marxist dogma from half the students-after a semester of Public
Choice theory demonstrating the contrary (IoL 4/00).
A Louis Harris survey conducted for the National Council on
Economic Education showed that less than half of American
students or adults understand the effects of price controls or
the concept of scarcity. (Congressmen weren't tested.)
Tax breaks, of course, are not in the self-interest of the
increasing proportion of the population, from high-salaried
public "servants" to low-income workers to welfare recipients,
that receives a net benefit from tax revenues.
The current third-party payment scheme-an insurance market
it is not-developed from a convoluted series of government
favors, such as HMO subsidies, the HMO Act that forced business
to offer an HMO product, Medicare contracts, and barriers to
market entry by upstarts. The Blues, according to Greg Scandlen,
were "an absolute anti-trust violation (the hospitals joined
together to create a monopoly payer which gave the same hospitals
special treatment), that was allowed only through the `state
action' doctrine." The result has been destruction of prices (as
opposed to "charges" created out of hot air or Harvard or AMA RB-
RVS computers), the key mechanism for information transfer in a
free market. Moreover, insurance markets cannot plan long-term
due to dependence on political winds-possibly accounting for the
mass defection of reinsurers, on which small companies depend.
Managed-care abuses are legion, but "patients' rights"
proposals would only make the situation worse. As Dr. George
Fisher has pointed out, "Government administrative agencies fully
understand that if they afford a large number of appeals
mechanisms, they are creating the opportunity for determined
opponents to bring the system down by deliberate use of every
right afforded." While this could make managed care go away, it
could also destroy indemnity insurance, to which recent proposals
also apply. If courts refuse to recognize contractual exclusions,
insurers will not be able to price risk.
The current scheme appears to be as entrenched as the buggy
whip and Digital's status as the most successful computer company
in history-until the horseless carriage and the PC and the
Internet. Disruptive innovation could change the landscape very
quickly. Though politicians favor the Hillary Care concept-a
return to the 19th century hub-and-spokes arrangement with
knowledge and power concentrated in the elite-patients, doctors,
and businesses are increasingly taking matters into their own
Non-network physicians could be found-and evaluated -by
patients on the Internet. See nascent efforts such as www.myhealthscore.com
(threatened with a lawsuit by the AMA for posting CPT codes and
; and www.idny.org.
Patients can also shop for insurance on-line, as at
www.EHealthInsurance.com., 40% of whose customers were
previously uninsured. Many are choosing short-term policies (one
to three months)-much less expensive than COBRA coverage.
Employers are shifting to defined contribution, with plans chosen
by the employee (www.conning.com); various
consumer-driven companies can expect an enrollment of about
500,000 employees in 2002.
Development of a true market is seriously hampered by the
tax code: who can afford to give up the 40% subsidy for employer-
owned insurance? Still, the truth is out there. Freedom is
available. Patient-driven transactions can replace the game-
theory driven environment in which hospitals and physicians have
the same incentives as farmers who are paid not to grow wheat.
The question of the decade is this: can changes propelled by
patient power reach escape velocity before Senator Daschle et al.
manage to dismember and crush them?
How to Kill the Tax-Credit Idea
As George Fisher, M.D., points out, when you get tired of
opposing something you dislike, you agree to adopt it, but only
on condition that some crippling feature is included.
After 50 years of opposing the St. Lawrence Seaway, the
railroads finally agreed to it, but only on condition that the
locks at Messina would be so narrow that only eels could pass.
And you know what happened to MSAs.
Doctor Fights Health Dept. Information Grab
Writing to State Rep. Charles Gray, G. Keith Smith, M.D., of
Oklahoma City explains that his opposition to the health
department's attempt to grab private patient information for
health studies is not about the security arrangments, but about
lack of patient consent. "I don't care if the information is in
Fort Knox, once it becomes digitized it will never be secure."
The health commissioner admits that "if we ask for their consent
to release this information, we won't get it."
"Numerous historical precedents exist wherein medical
personnel and facilities have become agents of the state rather
than their patients. The most famous was about 60 years ago in
Berlin. Much was said then about subordinating the interests of
the individual for the good of the whole or the many."
Emergency Powers Act Causing Outrage
Civil libertarians, Constitutionalists, and privacy
advocates are joining together to do battle against the proposed
Model State Emergency Health Powers Act, MEHPA (see AAPS
News Jan. 2002). Although he had
quickly endorsed the proposal in a press release, HHS Secretary
Thompson, in a Dec. 14 letter to Steve McDaniel of the American
Legislative Exchange Council, now states that the draft bill
prepared by Lawrence Gostin "represents neither an official nor
unofficial position by HHS, CDC, or this Administration," and
denies any effort to dictate to the States.
The Dec. 21 draft posted at www.publichealthlaw.net
deletes the mention of firearms (though not the power to
seize them) and also removes the criminalization of patients'
refusal to be vaccinated or doctors' refusal to serve the State.
However, doctors could be permanently delicensed for failure to
cooperate. In an AAPS analysis posted at
, Executive Director Jane Orient, M.D., notes the minor
improvements but calls the draft "a disingenuous effort to mute
criticism while making little substantial change."
In a point/counterpoint symposium, Gostin writes that
"private property is worth protecting" (a decidedly tepid view of
a basic human right), but emphasizes the "common good." AAPS
Immediate Past President Robert J. Cihak, M.D., and Michael
Glueck, M.D., respond: "endowing state governments with such
power could result in fear and terror more pervasive than
possible from any terrorist attack" (Insight 1/7/02).
One-man rule, and a "small dose of tyranny" are more like a
prescription for disaster than the best cure for terrorism,
concludes Jonathan Turley (Jewish World Review 1/7/02).
He states that in true emergency, the governor already has all
the authority he needs, within the framework of legislative and
judicial oversight. It is "unchecked authority that is
the dubious contribution of the Model Act." And, most
astonishingly, "triggering of this absolute authority is left
entirely to the discretion of each governor."
Doctor Opposes AAFP "Universal Coverage" Plan
Dr. Glenn P. Dewberry, M.D., of Oklahoma City wrote a letter
to 100 family physicians to explain why he was dropping out of
the AAFP: The "universal coverage" plan being pushed by AAFP
would open the door to government-controlled medicine, he said.
Many delegates at the 2001 Atlanta meeting objected to the plan;
the vote was so close that three separate head counts were
needed. The final tally was 59% for, 41% against. "This does not
mean that 59% of members (as opposed to delegates)
support the plan and hardly shows the `overwhelming support' that
AAFP has claimed."
"My resolution failed [see below], in part because
President-Elect James Martin, M.D., said the plan would be put
`on the shelf.' But if the report does not bind the AAFP to a
specific course of action, why has the AAFP spent so much time
and money supporting it? It seems that AAFP leaders feel so
strongly about adopting a government-controlled system that they
don't care if nearly half the members disagree with them."
The "AAFP has been used to provide a 30-second sound bite
for proponents of government medicine. I do not think that is a
valid purpose for the AAFP and decided not to send $600/year to
support it; I can keep track of my own CME. I believe that if 50%
of the members decided to drop out that would attract attention
leading to real progress `in the debate'."
Model Resolutions (full text at www.aapsonline.org)
"Universal Coverage": Okla. Academy of Family
Physicians RESOLVED: that the OAFP does not support the
strategy of achieving universal health coverage through a
government agency that would have the authority to determine a
benefits package, set reimbursement rates, and perform the
regulatory duties of overseeing the program... and that the OAFP
does not support the strategy of achieving universal coverage by
implementing a payroll tax.
by Glenn Dewberry, M.D.
Unique Medical Identifiers: California Medical
RESOLVED: that the California Medical Association actively
oppose the use of any patient identifying number, including the
Social Security number, which might permit unfettered access by
the government or other entities to confidential patient
by Susan Hansen, M.D.
Patient-Friendly Financing: California Medical
RESOLVED: That the CMA study, design, support and endorse
only innovative, consumer-driven and controlled health
care financing programs, such as MSAs linked to high-deductible,
unmanaged insurance, and defined-contribution employer
by Thomas LaGrelius, M.D.
Doctors, Patients Harmed by Privacy Regs
In response to the government's assertion in AAPS et al. v. HHS that
any harm from the Privacy Rule is a mere hypothetical, a number
of AAPS members have come forward to file affidavits attesting to
the costs and other harmful effects they are already
experiencing. Additionally, patient plaintiff Dawn Richardson
declares that not only have her communications with physicians
been chilled, but her access to medical care for her children is
"Now that government has access to patient records,
physicians have already expressed to me and members of PROVE
[Parents Requesting Open Vaccine Education] that they will no
longer care for children who have not been fully vaccinated in
compliance with all government vaccine recommendations and
mandates because they fear penalty."
Mrs. Richardson also testified to personal involvement with
parents who had been threatened with seizure of their children
because of lawful decisions to decline a controversial vaccine.
"The Privacy Rule discourages patients ... from providing medical
history ... that can be used against them."
Among the arguments in a 50-page memorandum responding to
the government's Motion to Dismiss, AAPS points out that the
Defendant actually left out the last four words in quoting
the Tenth Amendment-"or to the people"- attempting to deny
that "the Constitution divides authority between federal and
state governments for the protection of individuals," as "State
sovereignty is not just an end in itself" (Coleman v.
Thompson, Blackmun dissenting).
The HHS claim that the narrow delegation of authority to
regulate electronic records constitutes nearly unlimited
authority to regulate all medical information "is akin to the
Federal Communications Commission (FCC) claiming that because it
can regulate interstate phone calls, it can also regulate other
activities of persons if they ever make an interstate phone
AAPS requests discovery on a number of points: the ratio of
paper to electronic records; the accuracy of the HHS allegation
that "an overwhelmingly large number of commenters" urged the
expansion of regulation to all records; the facts relevant to
claiming an exemption from the Paperwork Reduction Act; and the
actual steps the agency took to minimize the impact on small
entities as required by the Regulatory Flexibility Act. The mere
fact that an outside consultant was retained is not enough.
A hearing was held in Houston on Jan. 4.
Litigation is being funded by the American Health Legal
Foundation; contributions are tax-deductible.
Tainted Claims Case Dismissed
In U.S. ex rel. v. Mikes, the Second Circuit
dismissed a False Claims Act qui tam complaint against three
oncologists. On the "tainted claims" theory (see AAPS News
Dec. 2001), the doctors were not entitled
to $28,922 in payment for spirometry because they did not follow
American Thoracic Society guidelines for daily calibration of the
The Court ruled that a claim can only be "false" if the
physician falsely certifies compliance with a law or rule
that is a condition for government payment. In an amicus
brief, the government argued that claims for substandard tests
were false claims for worthless services. However, the Court
found no evidence that the doctors had knowingly submitted claims
for worthless services.
"While this case is a victory for physicians nationwide,"
writes attorney Amy Woodhall of Cleveland, OH, who consults for
the AAPS LLCS, "keep in mind that the court awarded the
physicians only $5,000 of their $437,000 attorneys' fee. Further,
the physicians' arguments on appeal were supported in briefs by a
coalition of medical societies."
Tip of the Month: The process of selecting a jury, the
"voir dire," is perhaps the most important part of a trial. A
defendant-physician should never waive his right to it. He can
typically remove up to ten potential jurors without giving a
reason. Bureaucrats should probably be excused. Also, jurors at
the two ends of the political spectrum are probably better for a
defendant than those in the middle.
Courts Weigh Abortion-Breast Cancer Link
In what is probably the first such settlement in history, an
Australian woman settled with an abortionist she had sued for
failing to inform her of research linking abortion with an
increased risk of breast cancer. The amount was undisclosed.
Abortionists, as a rule, do not inform patients that 27 out
of 35 relevant studies published since 1957 have linked abortion
with breast cancer (WorldNetDaily 12/30/01).
In North Dakota, the Red River Women's Clinic is being sued
for false advertising by abortion protester Amy Jo Mattson, on
the basis of promotional material stating that "none of [the
claims about a link between abortion and breast cancer] are
supported by medical research or established medical
organizations." Her attorney, John Kindley, authored a 1998
article on informed consent laws and the ABC link.
After an extensive review of the scientific evidence and the
legal methodology, as for establishing decision causation,
Kindley concludes: "Abortion providers' continuing failure to
inform patients about the steadily accumulating evidence of the
ABC [abortion-breast cancer] link can ... be considered a
trespass ... against the patient's `right to determine what shall
... be done with [her] own body' " (
Attorney Scott Somerville compares the case to tobacco
lawsuits. People continue to smoke, and will continue to have
abortions, but there are tremendous financial consequences for
the industry. The ND Century Code, for example, provides $10,000
and triple the amount in actual damages to women who were not
provided with enough information to grant "informed consent" for
an abortion (WorldNetDaily 8/26/00).
TAP Pharmaceuticals Gagged
For marketing tactics such as charging doctors less than the
"wholesale" price of Lupron, TAP settled for $845 million, paid a
$290 million criminal fine, and is on probation for 5 years.
Moreover, it is forbidden to criticize the sentence or to say
that the plea was for convenience (BNA's HCFR 12/12/01).
Feb. 9. Board of Directors meeting, Dallas, TX.
May 17. Board of Directors meeting, Las Vegas, NV.
May 18. Spring meeting, Las Vegas, NV (to be
Sept. 18-21. 59th annual meeting, Tucson, AZ.
Sept. 24-27, 2003. 60th annual mtg, Point Clear, AL
Sickest Hurt Most. Recent Medicare fee cuts are
disproportionately higher for the higher levels of service. As a
corollary, within the past two years Medicare instituted a "site-
of-service reduction," paying an additional 5% less for Critical
Care Services (CPT codes 99291 and 99292) because they are
provided in a hospital. Of course, critical care services
are virtually always provided in a hospital. This reduction is
also applied to lumbar punctures. Through this substantial
disincentive for physicians to care for sicker patients, the
government discriminates against the sickest of the sick.
As a result of Medicare price controls that fix many of our
fees below the cost of providing service, and in the face of
escalating costs incurred in dealing with the incompetent and
abusive HCFA/CMS bureaucracy, our office has been forced to
restrict services provided to Medicare "beneficiaries." Although
our goal is to serve everyone in need, we cannot both provide
and pay for services that Medicare patients need. We will
also need to restrict further the number of Medicare patients
that we accept in order to control the financial losses we suffer
due to treating these trapped government dependents. The
government has made seniors second-class citizens, subject to
price controls on the order of 10 cents on the dollar, who can
neither obtain medical care under the system nor escape from the
government's control by purchasing their own care.
Lawrence R. Huntoon, M.D., Ph.D., Jamestown, NY
Accept Medicare, or Else. Citizens who reject Medicare
Part A cannot receive Social Security benefits, and must return
any payments they have already received. I am glad that someone
besides me-Sue Blevins in her new book Medicare's Midlife
Crisis-has taken note of this policy. I find it quite
surprising that there has been virtually no public discussion
Beverly Woodward, Ph.D., Waltham, MA
The AMA and HIPAA. Last session, the AMA passed an
endorsement of the privacy regulations; opponents didn't think it
was worth being politically incorrect. This session, the people
who will have to obey this trash are suddenly aware of the
egregious extent of it, and are mad as hell. It will be fun to
see the circumlocutions, since the AMA is like the Supreme Court,
pretending never to reverse itself. But you can be sure it will
reverse in fact, if not in words.
George Fisher, M.D., Philadelphia, PA
Two Tiers in Canada. Powerful politicians are
suggesting that we will have to partially re-privatize our
medical system, or at least allow private purchase of care by
individuals, i.e. a two-tier setup such as has existed in Britain
since 1948. This would be a giant leap forward, allowing a
yardstick for comparison with the public system. Politicians have
not suddenly acquired common sense; they finally see that the
system is financially untenable, no matter how many tax dollars
they throw at it.
William Goodman, M.D., Toronto, Ontario
Drug Price Controls. In British Columbia, 27% of
physicians reported admitting patients to the emergency room or
hospital as a result of switching medicines, as mandated by the
government reference price system. Patient confusion about
switching cardiac or hypertension drugs was reported by 68% of
physicians, and worsening of symptoms by 60%.
Ernest J. White, Alexandria, VA
Who Will Answer? When the lefties attack me by hate e-
mail, ranting that I don't care about the downtrodden, I calmly
ask them how much I should have to pay in taxes above the 40%
that already goes to government. It shuts them right up. Not one
of about 50 leftist readers, editors, or journalists has answered
Craig Cantoni, Scottsdale, AZ
A Pledge. I pledge allegiance to the Constitution of
the united States of America, and to the Republic which it
defines, a nation of independent states under God, ensuring
liberty and justice to all.
Charles Heller, Tucson, AZ
Independence Is Wonderful. I watch with sadness so many
of our group knocking their heads against the wall of the third
party payment problem. If one is willing to pull in one's belt
(financially), one will find that it is a joy to practice
medicine without any third party being involved. Of course you
are going to treat a lot of those Medicare and HMO patients at a
reduced rate, but I have been pleasantly surprised at how
responsible most will become (after some understandable initial
grousing). Come on in; the water's fine!
Philip Catalano, M.D., Bradenton, FL
Children Need Supervision. If physicians can't be
trusted in the financial sense, it's because they don't deal with
patients on financial matters. The whole process by which
physicians deal with third parties relegates consumers/patients
to the responsibility status of children, who must of course be
Frank Timmins, HealthBenefitsReform group
What Does "Single Payer Mean"? Is it a euphemism for
total government takeover, or are "liberals" suddenly
enthusiastic about a corporate monopoly?
James Pendleton, M.D., Bryn Athyn, PA
Legislative AlertIt's the Structure, Stupid!
You would not know it from most of the press accounts. But
the recent Congressional debate just before Christmas over the
medical insurance problems of laid-off workers was perhaps the
most momentous collision on health policy since the collapse of
the Clinton Plan in 1994. High stakes.
Why? Because the central issues were clearly and openly
joined: Who is going to control the flow of money in the system?
And who is going to make the key decision over the choice of
plans, benefits, and medical treatments and procedures? The
central issue was not money or numbers of people covered, but
rather structure and control. This discrete and bitter battle was
yet another proxy fight between those who want government-run
medicine and those who want a free market. But this round was
The nastiness was in many respects a continuing debate over
the limitations of employment-based medical insurance. Those who
work for a big organization and have a big income have access to
a big medical benefits package, usually more than one, and in
effect a big chunk of tax-free income to boot, roughly equal to
40% of the cost of the package. Those who are poor and work for a
small firm without a company-based plan get no tax break at all.
Likewise, the unemployed get nothing. In the waning days of 2001,
President Bush and his allies in Congress attempted to change
At 4:00 a.m. on Dec. 20, the House of Representatives, with
the backing of the Administration in the aftermath of brokering a
crucial agreement between the White House and leading Senate
"centrists," voted to pass a $110 billion economic stimulus bill.
That bill included $13 billion in refundable tax credits for
those who had lost their insurance coverage. Individuals and
families would get a refundable credit of 60% of the cost of
private insurance premiums. The tax credit would be available for
a period of two years. The vote was 224 to 193.
In the Senate, the Administration and its Congressional
allies were certain they could get a bipartisan majority of at
least 53 votes to enact the bill. But Senator Majority Leader
Thomas Daschle (D-SD) refused to allow a vote. Earlier in the
protracted discussions on the fate of economic stimulus package,
Sen. Daschle had erected another procedural hurdle: any
compromise agreement package would have to pass the muster of
two-thirds of the Senate Democratic caucus. This meant that the
influential Senate leftists who specialize in health policy,
including Kennedy (D-MA), Clinton (D-NY), and Rockefeller (D-WV),
would get the equivalent of a veto over the terms of the final
legislation. To overcome Sen. Daschle's firm opposition, the
Senate sponsors of the House-passed bill would have had to secure
60 votes to achieve "cloture" and bring the bill to the floor, a
task that was simply out of reach. On the afternoon of Dec. 20,
Senate Minority Leader Trent Lott (R-MS) sought "unanimous
consent" to bring up the House-passed stimulus package for debate
and a vote. Sen. Daschle objected, then immediately offered,
under unanimous consent, a 13-week extension of unemployment
benefits. Lott objected. The stimulus debate ended.
The Evolution of the Policy
Shortly after the Sept. 11 terrorist attacks, Senator
Jean Carnahan (D-MO) proposed a major program to aid the
unemployed: generous subsidies to those eligible for a an 18-
month continuation of medical insurance through their former
employer's plan under the terms of the Consolidated Omnibus
Reconciliation Act of 1986 (COBRA), plus a major expansion of
Medicaid. Kennedy then proposed a more robust, multi-billion
dollar version. Eventually, the Democrats' proposal crystallized
into a 75% subsidy for COBRA coverage for those eligible, plus
Medicaid expansion for those not. Clearly, Senate leftists
intended to seize this opportunity to secure a major expansion of
Medicaid-a first tier of nationalized insurance.
Republicans, au naturel, at first responded to the
Left's major initiative with precisely Nothing, waiting for the
White House to take the lead. President Bush originally proposed
a vague $3 billion block grant to the states. The Left never saw
this as any kind of threat because the bulk transfer of federal
monies to state governments-in reality state bureaucracies- for
medical care usually means an expansion of Medicaid. Nor was the
small amount ever a serious issue; Congress can add funding any
time. Remember: structure and control.
Senator Jim Jeffords (I-VT) proposed to address COBRA
coverage with a new system of tax credits, building upon a
previous bipartisan proposal. Jeffords's general approach in
favor of individual tax relief for the purchase of medical
insurance was shared with others, notably Senators Bill Frist (R-
TN), Rick Santorum (R-PA), and John Breaux (D-LA), the
acknowledged head of the Senate "centrists." The problem with
restricting tax relief to COBRA coverage is that COBRA coverage
is invariably expensive because eligible persons were in big
corporate plans. Breaux had a better idea. If tax credits were
good enough for the expensive COBRA coverage, why not simply
allow people to use tax credits for any other type of private
medical insurance, including more affordable coverage outside of
COBRA? This was a fundamental break with more than 60 years of
entrenched federal policy. Breaux and his Senate allies,
including Jeffords, backed the provision of individual tax relief
for the purchase of private medical insurance outside of the
workplace. Individuals, in other words, would choose their plans,
not employers, and they alone would control the flow of the
money. Not employers, not Medicaid. Once again, remember,
structure and control.
Medicaid for the Masses?
Talks between House and Senate staff over the fine points of
the stimulus package went nowhere throughout most of December.
Remarkably, Democratic negotiators "reportedly sought to provide
incentives to states to expand Medicaid coverage to people up to
400% of poverty" (White House Bulletin 12/14/01). Based
on 2000 Census Bureau estimates, for a single person that would
mean an income of almost $36,000 per year; for a two-person
family, more than $44,000; and for a four-person family, more
than $68,000. These new eligibility standards would cast the
Medicaid net over millions of persons: a wild proposition-except
among those whose overriding goal is to secure government control
over the financing and delivery of American medicine.
The White House Breakthrough
Meanwhile, Rep. Bill Thomas (R-CA), chairman of the
House Ways and Means Committee, proposed a broader tax credit,
worth roughly $10 to 13 billion in additional outlays and forgone
revenues, that could be used by unemployed persons for any type
of private medical insurance coverage. Thomas sided with the
Senate centrists on the undesirability of restricting tax relief
for COBRA coverage and promoting a massive expansion of
financially troubled Medicaid. The White House had achieved a
breakthrough, coming to an understanding with Breaux and Senate
"centrists" on the whole economic package, accelerated tax cuts
and investment stimulation, as well as a new medical insurance
tax credit equal to 50% of the premium, up to $294 per month for
family coverage. Shortly thereafter, the medical insurance credit
was increased to 60%.
The Lessons of the Stimulus Debate
1. Congressional Republicans discovered the truth
that the health care policy debate is not about money; it's about
the structure of reform. The Left has always understood
that. The Bush team and its Congressional allies went from a
vague block grant proposal, totaling $3 billion, to a $13 billion
package of tax credits, and were willing to go higher, but
Democratic leaders were simply not interested. The reason: "In
the view of many Democrats, Republicans may have moved left on
some tax issues, but actually headed further right on health
insurance. That is because under the GOP plan, the credit
would be given to individuals to seek out their own
insurance, paying 60 percent of the cost, while
Democrats wanted a more generous credit to work through the
current employer based health care system" (Wash Post
12/20/01, emphasis added). Additionally, "Democrats view this
plan as laying the groundwork for the administration's goal of
health insurance tax credits for all Americans" (Wash
Post 12/17/01). The Left gets it. When Democrats push for an
expansion of SCHIP or Medicaid, or Medicare prescription drug
coverage through the Medicare bureaucracy, too often Republicans
don't. Now they might.
2. The Left needs to abort personal choice of plans
and benefits, and make sure the medical insurance system largely
stays the way it is in order to facilitate a transition to a
government-controlled system. In a real market, millions
of people make decisions every minute, and there are millions-
no, billions-of decision points in market transactions. Those
dynamics are impossible to monitor, let alone control. In the
employment-based system, there is one key decision point: the
contract between the employer and the insurance company. That
point is neatly defined and that transaction is easy to regulate
and control. Look at mandates and employer-based insurance
regulations, rules, and guidelines at the federal at state
levels. This is why, although Democratic leaders indicated that
they would accept a medical insurance tax credit, "they are
pushing instead for higher payment-up to 75% of premiums -
and want it available instead to the insurance companies
or employers of workers who qualify for a federal plan that lets
people keep company provided health insurance after they
lose their jobs" (Wash Post 12/17/01, emphasis added.)
3. Congressional Republicans, aided by the political
skills of the Bush White House, found themselves for the very
first time in memory playing offense on health-related
policy. By putting together an attractive proposal
broadening personal choice, the White House and its allies forced
the Congressional Left into a defensive mode, requiring them to
resort to parliamentary maneuvers such as silly internal partisan
caucus agreements and blocking motions. That should require a lot
of explaining to a befuddled public. Moreover, the Congressional
Left, like its allies in various think tanks, really wants to
expand Medicaid, notorious for substandard care, though Americans
would probably not accept this poorly performing welfare program
over private insurance if they got the choice. The Left,
therefore, has been forced to remove any real choice, and defend
a politically weakened position with transparently incredible
excuses. Nobody with two neurons firing really believes that
Senate champions of national health insurance really, deep down
want to preserve private employer-based medical insurance because
that would be the best of all policy worlds. No; they want to
replace it with national health insurance, while expanding
Medicaid in the process. The question now is whether the
President and his allies on Capitol Hill can fully capitalize on
their newly found position on the high ground in the debate and
aggressively press their political and public relations agenda.
They have a golden opportunity.
The "Choice Wars"
Go to any academic or professional health care policy
conference, and you will clearly see that "Conservatives" and
"Moderates"-if they are invited, a big if-are forming a coalition
for personal choice and competition within the framework of a
voluntary, private market. Left-wing policy analysts often don't
like "choice" in health care, or in education, or in pension
policy, or a lot of other areas of life, with, of course, the
sacrosanct exception of abortion which, after all, is OK under
any or all circumstances. (Being "judgmental" in that
matter is not only "bad" in some vague way, well, it's also
"inappropriate" and utterly lower-middle class, and all that.)
But policy conferences have been more closely examining the issue
of "choice" in medical care. Is choice really necessary? (Not
really.) When is or isn't choice "appropriate" in a "market"?
(Almost never.) Isn't "choice" only important when it comes to
doctors? (Yes, and the health plan that engages doctors could
just as well be national and run so much more efficiently by the
government.) Does choice lead to "desirable" outcomes? (Of course
not!) Do ordinary people have the sufficiency of knowledge or
intelligence to make intelligent choices? (You kidding?) How can
we "regulate" choice to make sure that choice is the right
choice? (You get the choice we superior people give you.) What
are the "implications" of choice (Not Good). How can you have
choice without adverse selection in the health insurance market?
(You can't: therefore, this annoying choice thing has simply got
Fortunately, the President and his allies in Congress don't
have to score points at academic conferences. All they have to do
is to persuade the American people, who remain, thank God, the
national repository of common sense.
Robert Moffit is a prominent Washington health policy
analyst and Director of Domestic Policy at the Heritage